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The Potential Problems Of Rescheduling Cannabis

By Roger Malespin (photo/istock.com/t:designer491)

We’ve written lots already on the problem that the current schedule 1 classification of cannabis is both impractical and immoral. Aside from cannabis not being anywhere near heroin and other schedule 1 drugs in harm and addiction, the classification also hinders scientific research, denies legitimate cannabis businesses equal access to banks and investments, and technically doesn’t allow states to pass their own rules on the substance. There’s no doubt that rescheduling would be a great thing overall, but there are a new set of problems that would likely come with it, and we’d like to keep everyone informed on what they are and how to prepare for them.

It’s becoming increasingly likely that marijuana will be reclassified at the federal level. When this happens, the most probable outcome is that it is changed to a class 2 drug, which means it is recognized as having medical benefits but also is prone to abuse. The biggest problem this presents is that is gives the federal government full control over the cannabis industry.

Federal control over cannabis would give the government full control over the growing, packaging, marketing etc.; of all medical cannabis products. While a lot of this control would come in the form of safety oversight, there would also probably be strict monitoring of cannabis crop tetrahydrocannabinol (THC) content and cannabidiol (CBD), the psychoactive and non-psychoactive components of cannabis, respectively. Additionally, the FDA would have the potential power to require clinical trials be conducted to prove the exact benefits of cannabis for patients. For example, it could require rigorous and extensive testing on how much pain relief it provides for cancer patients - a process that could take years and cost millions, and go beyond the trials provided by states thus far. This is a gray area whose particulars are difficult to foresee, but at the least the FDA studies would be much more expensive and time consuming, and quite possibly lead to them cutting off medical marijuana to patients should they deem a trial faulty or not up to their standards.

Another problem would be that cannabis business would still be beholden to tax code 280E, which means that the business would be required to pay exorbitantly high tax rates, which affects everything in the business from their ability to hire, maintain stock, and expand into new markets. Businesses hoping to be taxed at their net profit rather than their gross will be disappointed, and would have to look for other avenues within the business to save more money.

These are some of the major problems that are on the table when the classification change happens. It should be noted that the time it will take to reclassify could be a ways off, assuming the current administration and Attorney General are not voted out of office in the next election cycle. Anyone currently in the cannabis industry or anyone thinking about starting a small business need to be aware of these rules as part of their long term business strategy. We will keep our readers informed of any developments in this rapidly changing industry, and encourage startups to plan accordingly - it may be that a cannabis business may not be as profitable in the short term as one might think.